NVIDIA Ahead of Earnings: Is the Stock Heading Toward $175?

NVIDIA is expected to report its second-quarter earnings tomorrow, with investor expectations currently at particularly high levels. The company continues to deliver exceptional growth, but precisely because of that, it appears that the market is no longer satisfied with merely strong results.

Alongside the fundamental picture, the monthly chart is beginning to show initial signs of weakness following a very sharp upward move. In our assessment, the combination of extremely high expectations ahead of the earnings report and the price structure that has formed near the highs increases the probability of a downward correction, with an initial potential target around $175.00.

What is the market expecting from the earnings report?

Expectations ahead of the earnings report are extremely high. The market expects NVIDIA to report quarterly revenue of approximately $92 billion, nearly double the level recorded during the same period last year.

This time, however, investors are not focused only on whether NVIDIA will beat expectations. The company has already accustomed the market to very strong results, and therefore the main question is whether the results will be strong enough to surprise a market that is already expecting almost perfect execution.

A great deal of attention is also expected to be directed toward the company’s guidance for the next quarter. The current market consensus stands at approximately $104 billion in revenue, with guidance meaningfully above that level likely to be viewed positively, while guidance closer to existing expectations could be considered disappointing even if, in absolute terms, it still represents extraordinary growth.

Why might even a strong earnings report not be enough?

One of the most interesting points ahead of the earnings report is that NVIDIA managed to beat both revenue and earnings expectations in each of its last four reports, yet the stock still declined following the release of those results.

This highlights just how high expectations for the company have become. When the market already assumes in advance that the company will deliver excellent results, simply beating expectations is not necessarily enough to drive the share price higher.

Investors are also expected to closely monitor the company’s margins. NVIDIA has guided for adjusted gross margins of approximately 75 percent, an exceptionally high level for a hardware company. A meaningful decline in margins could raise concerns even if revenue itself continues to grow at a very strong pace.

What does the monthly chart show?

Nvidia Monthly Chart

From a technical perspective, NVIDIA has completed a very significant move following the breakout above its previous resistance area.

From the area where the breakout occurred, the price advanced by approximately 100 percent. In effect, the stock reached an area where a one-to-one measured move from the breakout has already been completed, an area that can often serve as a natural profit-taking zone for traders and investors.

Following such a sharp advance, some investors who are already holding substantial profits may choose to lock in part of those gains, particularly while the stock is trading close to its historical highs.

Are we already seeing the beginning of profit-taking?

The chart shows that a red monthly candle has already formed near the highs, providing an initial indication that buying pressure has weakened compared with the period that preceded it.

In addition, the price has begun to form a declining structure from the recent highs. At this stage, it is still too early to determine whether this represents a long-term trend reversal, but from a technical perspective it is a development that deserves attention.

When a price completes a strong move, reaches a meaningful target area and then begins to form lower highs together with signs of selling pressure, the probability of a deeper correction increases.

Why could the earnings report become the trigger?

The timing makes the upcoming earnings report particularly significant.

On one hand, the company enters the report with very strong business fundamentals and a central position in the artificial intelligence infrastructure market. On the other hand, the stock price has already completed a major move and expectations are extremely high.

In this type of environment, a strong report that is not exceptional may become a trigger for profit-taking. Investors do not necessarily need to see a weak earnings report in order to sell. Sometimes it is enough for the company to fail to deliver a significant upside surprise for traders who are already sitting on substantial profits to begin realizing those gains.

How far could the price fall?

As long as the stock does not return to break above the recent highs and demonstrate clear continuation to the upside, we believe that the short-term risk is increasingly tilted toward a correction.

The initial target we identify is around $175.00.

This area is located below the current trading range and could serve as a natural target if profit-taking from the highs continues. A decline toward this level would not necessarily change NVIDIA’s long-term fundamental story, but it could still represent a significant correction following the sharp advance that occurred after the breakout.

What is the conclusion?

NVIDIA remains one of the strongest and most important companies in the technology market, but the stock price is influenced not only by the quality of the company itself, but also by the expectations that are already priced into the shares.

Ahead of the earnings report, the market is expecting exceptional results, strong guidance and continued high profitability. At the same time, from a technical perspective, the stock has already completed an approximately 100 percent move from the breakout area, reached a zone where profit-taking may occur and begun to show initial signs of a declining price structure from the highs.

In our assessment, if the earnings report does not provide a very significant positive surprise, the probability of a continued correction will increase, with an initial potential target around $175.00.

Disclaimer: The information presented in this article reflects solely the personal opinion and assessment of the author and does not constitute investment advice, investment marketing, a recommendation to buy or sell any security, or a substitute for professional advice that takes into account the individual circumstances and needs of any person. The author and related parties may hold, directly or indirectly, positions in the securities or financial instruments mentioned in this article. Trading and investing in financial markets involve significant risk, including the possibility of a partial or complete loss of capital. Before making any investment decision, investors should independently evaluate the relevant information, the level of risk involved and the suitability of any investment to their individual financial circumstances.